LOCAL MATTERS

If asked why small businesses are important to local communities, many consumers might point to anecdotal evidence like they make them unique and contribute to their vitality. However, both national and local data sources show the importance of small businesses to local communities beyond feel good stories. According to the Small Business Administration, small businesses have accounted for 66 percent of employment growth in the United States over the last 25 years, and on Cape Cod the Cape Cod Commission estimates small businesses with less than 50 employees make up 97.5% of the employers in the region. In addition to being important partners in the employment of the domestic workforce, small businesses are also valuable wealth generators for their communities, along with the intangible providing community character. Since launching our Local Matters research series in 2020, Love Live Local has sought to demonstrate and emphasize this reality on Cape Cod.

The first in the series, Local Matters: Measuring Impact, quantified and assessed the impact of Cape Cod’s independent and locally owned businesses on Cape Cod’s economy and demonstrated that dollars spent at locally owned retailers and restaurants generate more local prosperity. The data analysis performed by economics consulting firm Civic Economics found: local retailers and restaurants keep about 2-4 times as much money in the local economy as their national chain competitors; if Amazon’s online sales in Barnstable County had occurred in independent retailers, they would support 125 additional retail outlets and 1,739 additional jobs; and shifting 10% of spending to local retailers would put an additional $112 million in the local economy every year.

Our 2021 research titled Local Matters: Investigating Influence explored why, despite their demonstrated importance to economic health and prosperity, small local businesses consistently face significant challenges in an increasingly corporatized global marketplace.

Love Live Local once again partnered with Civic Economics, to produce a report that focuses not on retailers and restaurants but instead on business and personal service providers and quantifying and assessing their impact on Cape Cod local economy.

With this study, Love Live Local seeks to expand the “shop local conversation” to include business and personal service providers, alongside their retail and restaurant local business counterparts, since they too face challenges due to the proliferation of national chains and ecommerce giants. Local accountants and bookkeepers, printers, and information technology providers face competition from big box chains as well as online services. Fitness centers face national corporate competitors and a growing online marketplace that was intensified by the COVID-19 pandemic. Local veterinary practices, dentist offices, real estate outfits and funeral homes are getting bought up by large corporations and private equity firms. And the local travel, legal, education, and insurance sectors have all been negatively impacted by the rapid spread of online commerce.

Local service providers like those listed above are an important contributor to the local economy, representing a $1.5 billion industry on Cape Cod and employing 9.1% of Cape Cod’s workforce.

Through local business surveys, we were able to gather enough data to analyze the impact of two personal and business service industries: fitness centers and accounting firms.

According to the latest data from the US Census Bureau there are 45 accounting firms employing 536 people in Barnstable County in 2020. The seven accounting firms recirculated an average of 63.2% of their revenue within Barnstable County. This compares to 42.1% recirculation for the largest corporate owned accounting firms. This represents a 50% local premium for the local accounting firms.

Based on the data from the survey, local service providers recirculate 50-85% more of their revenue into the local economy than their corporate competitors.

When comparing these local firms to a virtual or online service, the difference is even more dramatic. There is virtually no economic benefit to Barnstable County when using a business service that is not located on Cape Cod. All that money is leaving the community with no economic impact at all. Local service providers not only generate needed local tax dollars and jobs, but they typically recirculate some of their revenue to other locally based businesses which, in turn, continue the virtuous cycle. This money eventually winds up improving the local community whether it is going to build schools, roads, parks and providing other essential services to make Barnstable County a better place to live.

With this study and its 2020 predecessor, Love Live Local and Civic Economics have painted a clear picture of the value of independent, locally owned retailers, restaurants, hotels and business and personal service providers in the distinctive local economy of Cape Cod and Barnstable County.

Together, with the 2021 Local Matters: Investigating Influence, these reports present a compelling image of the economic importance of Cape Cod’s local business ecosystem and the value of supporting it through purchasing decisions and policy choices.

While chains like H&R Block, Staples, Kinkos, Best Buy and Planet Fitness and online services like TaxAct, Vistaprint, LegalZoom, Geico and Peloton extract dollars from Cape Cod, at local businesses who provide a superior level of service, you get a reverberation of local spending. The extra dollars in the local economy produce more jobs for residents, extra tax revenues for local governments, more investment in commercial and residential districts, and enhanced support for local nonprofits, and contribute much more to community vitality.

This important research was underwritten by the Cooperative Bank of Cape Cod and the Horizon Foundation.

To read the full report, please visit lovelivelocal.com/ localmatters